Norman Smith, a business consultant from Kent, has rejected an offer of pounds 100 from Save & Prosper after S&P admitted inefficiency in paying out the pounds 13,000 proceeds of a unit-linked life insurance savings policy.
The policy matured on 15 May and S&P gave Mr Smith the option of opening a bank account with a sister company, Robert Fleming, to accept the proceeds. There was a mix-up over the opening of the account, which meant that Mr Smith was unable to gain access to his money for more than a month after the policy matured. There was also a dispute over whether one month's premium had been paid.
In trying to sort out the problem, Mr Smith spoke to four different people at S&P and wrote to six others. He demanded compensation of pounds 450, arguing that the time spent communicating with S&P had eaten into his working hours and that the inability to gain access to his money could have presented financial problems for him and his business.
Mr Smith later reduced his demand to pounds 250 but S&P is sticking to its offer of a pounds 100 ex gratia payment.
Mr Smith has now taken his claim to the Insurance Ombudsman.
A spokeswoman for the legal advice department of the Consumers' Association points out that the law only allows compensation for inconvenience in certain circumstances. Even then, a strong case has to be made out and the complainant cannot bank on receiving a large amount. 'Our members frequently say they want to claim for inconvenience, and although we usually recommend that they do so, we advise that it is hard to prove,' she said.
Holidays are an exception. You can claim quite easily for inconvenience and loss of enjoyment if a holiday does not fulfil its advertised promises. But do not expect to get rich on the pickings.
'If a holiday company advertised that the hotel had a swimming pool and was 10 minutes from the beach, and when you get there you discover that the walk to the beach takes 20 minutes but that the pool is still available, the availability of the pool would be taken into account by a court when deciding how much you had suffered.'
In other types of claims, the best you can usually hope for is out-of-pocket expenses such as postage and the cost of telephone calls. People claiming for time lost from work would have to detail actual financial loss. 'An example would be someone who usually saw 10 clients an hour and could only see six because of the problem he was sorting out,' said the Consumers' Association spokeswoman.
The various ombudsmen who deal with consumer problems take different views on compensation, depending on their terms of reference.
Chris Hamer, manager of the Insurance Ombudsman Bureau, said that while there is scope for discretion, the Insurance Ombudsman had yet to order compensation for someone who had lost working time.
Chris Eadie, Deputy Banking Ombudsman, said: 'The law does not generally provide for compensation for inconvenience, but our terms of reference allow for it.'
Where the office decided to order compensation for inconvenience, the amount was usually set at between pounds 5 and pounds 10 an hour.
He added: 'We do get cases where people argue that because their bank charges pounds 25 for a letter, they should be able to claim that back for each letter they have written to the bank. We do not go along with this.'
At the office of the Building Societies Ombudsman, Stephen Edell said: 'We get cases where people say they are an accountant or something similar and charge pounds 150 an hour, and that is what they want. Here we follow the same procedure as the courts.
'If a complainant had not suffered a financial loss as a result of bringing his case to court, he would be compensated for the time and trouble taken, up to a maximum of pounds 8 an hour.'
A complainant may be able to prove financial loss to livelihood, but Mr Edell agrees with the Consumers' Association that this is not easy. 'If you were unable to see a client one day because of the problem but saw him the next day, that would not be a loss.'
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